General Information

The Michigan Homeowner Construction Lien Recovery Fund (Fund) was created under Part 2 of Public Act 497 of 1980, as amended, to provide protection when a homeowner has, in good faith, paid their licensed contractor for materials and labor but the contractor fails to compensate subcontractors, suppliers and/or laborers.

The program is funded through membership fee assessments on each new residential builder, maintenance and alteration contractor, electrical contractor, mechanical contractor and plumbing contractor licensed by the State of Michigan. Membership is also available to subcontractors, suppliers and laborers who provide materials or labor to licensed contractors. Beginning January 3, 2007 each licensed contractor is required to pay a $10 fee with their initial licensing application and a $10 per year fee when renewing each license they hold. Subcontractors are required to pay a $50 membership fee prior to beginning work and a $30 membership renewal fee on June 1^st every 3 years thereafter. Suppliers are required to pay a $50 membership fee prior to initiating a contract to supply materials or equipment and a $30 membership renewal fee on June 1^st every 3 years thereafter. Suppliers conducting business in more than one retail location must maintain separate memberships for each location. Laborers are required to pay a $50 membership fee when initially collecting from the Fund and a $30 membership renewal fee on June 1^st every 3 years thereafter.

The Fund was created to protect both homeowners who contract with a licensed builder/remodeler and the subcontractors, suppliers and laborers who provide materials or labor for the project. The Fund does not offer protection from losses on apartment buildings, "spec" homes, commercial construction or publicly owned structures.

In the past, homeowners who had completely paid a contractor for construction or remodeling could still be required to pay subcontractors, suppliers or laborers in order to ensure protection against liens and subsequent foreclosure action. The Construction Lien Act provides subcontractors, suppliers and laborers a means for remuneration while protecting the interests of homeowners.